• The company’s photonics business makes a critical component used in data centers and is a key factor in its recent rally.
• NVIDIA recently invested $2 billion in the company to collaborate on silicon photonics technology.
• Last week, Barclays turned bullish on the company and assigned an ‘Overweight’ rating. 

Shares of Marvell Technology (MRVL) have gained more than 50% this year, comfortably outpacing the S&P 500, which is marginally down. In April alone, MRVL stock rose by 30% and closed in the green for six out of seven active trading sessions.

What’s Behind MRVL’s Rally?

The company stands to be a direct beneficiary of the datacenter infrastructure buildout in the U.S., led by tech giants Meta, Amazon, Microsoft, and Google, who are shelling out billions of dollars to bring necessary compute power online for AI workloads.

While “Big Tech” is fighting the datacenter war, Marvell is uniquely positioned through its photonics business. The company is being viewed as a “plumber” in a scenario where its components are connected to thousands of GPU chips, among other important parts, to keep the infrastructure online.

Notably, tremendous bandwidth is needed to connect processors in an AI datacenter. They rely on an “optical transceiver,” which converts data into light, enabling faster transmissions. Marvell makes the key interconnecting component for these transceivers, called “digital signal processors.”

Impact On MRVL

Spending on AI infrastructure by tech behemoths has allowed Marvell to raise its fiscal 2027 revenue forecast to $11 billion, indicating 30% growth. In its latest quarterly report, Marvell highlighted a revenue jump of 22% to $2.2 billion.

Barclays turned bullish on the company last week and upgraded its rating to ‘Overweight’ from ‘Equal Weight’, according to TheFly. Analyst Tom O’Malley believes Marvell's optical business could grow 90% this year and next.

In late March, chip major Nvidia, recognizing Marvell’s potential in AI infrastructure, invested $2 billion to collaborate on silicon photonics technology, among other areas. Marvell is also poised to benefit from making custom AI chips for tech giants who are actively looking to reduce their reliance on Nvidia and design components in-house.

How Did Retail Traders React?

On Stocktwits, retail sentiment has turned ‘extremely bullish’ from ‘bullish,’ while messaging volumes turned ‘extremely high’ from ‘high.’

One user said MRVL has more upside potential and that investors should not sleep on the stock.

Another user thinks the stock is currently in “beast” mode.

Of the 43 Wall Street analysts covering the stock, 36 have rated MRVL ‘Buy’ or higher, while seven rate it a ‘Hold.’

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